Some 25% of small businesses record their finances on paper rather than a computer, according to a Clutch survey released on Monday. Manual account tracking is not only more time consuming, but also leaves opportunities for greater human error and physical damages, according to the Monday press release.
The survey also found that 45% of small businesses don’t have an accountant on staff. Most smaller companies can’t afford in-house accounting services, said the release, so Clutch recommends looking into third-party organizations for more affordable options.
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“Most small businesses need a combination of a controller, an accounting manager, and a [bookkeeper],” said Rhett Molitor, co-founder of Basis 365 Accounting, in the release. “Small businesses may not be able to afford that, so we usually see them under-hire.”
The report revealed that 73% of small businesses have only one employee who handles both accounting and HR responsibilities. Rather than having a person to solely manage finances, this person is also responsible for the entire company’s HR team. This creates a double-sided problem: Accountants are not typically trained on how to handle sensitive HR issues, and HR representatives are typically not trained on how to directly handle finances, said the release. One person for two jobs is ineffective and inefficient.
More than half (53%) of small businesses opt for accounting software when recording finances, stated the release. Software is an inexpensive, yet easy option for companies who can’t afford an accountant. The most common software option is QuickBooks, which is used by 74% of small businesses, according to the survey,
“It’s not expensive. It offers the benefits of information right at your fingertips, plus security and scalability,” said Donna Conte, service area leader for accounting services at Warren Averett, in the release.
With so many small businesses in need of accounting assistants, some 54% of companies are allocating their funds towards digital financial and accounting software. The other top tech investments small business are focusing on are cloud computing (48%) and data information and security (47%). Check out this TechRepublic article for a full top 10 list of areas small businesses will be investing in this year.
The big takeaways for tech leaders:
- 25% of small companies monitor finances on paper instead of on a computer, leaving more opportunity for human error and physical damages. — Clutch, 2018
- For small companies that can’t afford an in-house accountant, some 53% use accounting software to help. — Clutch, 2018